triggered a round of negotiations between the parliament, the European Commission and national governments.

The budget cannot be implemented without the approval of the parliament. The €960 billion budget agreed by EU heads of state in February was about 3 per cent less in real terms than the existing budget and was the first reduction in the budget, known as the multiannual financial framework (MFF), since the union’s formation. MEPs rejected the deal by 506-161 votes and called for more flexibility.

British MEP and leader of the European Conservatives and Reformists Group Martin Callanan said MEPs who rejected calls for belt-tightening were “flying in the face of public opinion” and said the vote made the European Parliament “look completely out of touch with reality”. He urged EU leaders to stand firm behind the budget they agreed.

But European Parliament president Martin Schulz defended the outcome, saying it paved the way for possible negotiations with EU governments. “The European Parliament cannot accept the proposal from the member states without the fulfilment of certain essential conditions,” he said.

Unpaid claims
Mr Schulz said the parliament would not enter into negotiations until unpaid payment claims for 2012 had been covered. Unpaid bills, particularly in areas such as regional aid, have been mounting up over recent years as the member states haven’t provided enough money to pay incoming bills and outstanding bills. The parliament also called for a mid-term review of the budget.

Minister for European Affairs Lucinda Creighton said it was now the job of the Irish presidency to make progress on these issues “and that ultimately we can see the MFF adopted, hopefully by May”.